Dáil debates

Tuesday, 10 October 2017

Financial Resolution No. 3: Intangible Assets


10:55 pm

Photo of Charles FlanaganCharles Flanagan (Laois, Fine Gael) | Oireachtas source

The second issue concerns the capital allowance in the first instance. I acknowledge that there are difficulties in assessing the potential for changes, given the nature of the companies involved, the predictions of their future behaviour and the expenditure amounts involved. However, in recent times the Revenue Commissioners have reviewed the data for prior year claims under section 291A and the profits of and the corporation tax paid by companies using the section. Using these data and extrapolating an estimated level of intangible assets to be placed onshore in the future, it is expected that this measure will raise in the region of €150 million next year. This is an issue that can be discussed in detail later this year in the context of the Finance Bill.

Deputy Richard Boyd Barrett has referred to these measures as loopholes, but I do not accept that. Neither do I accept what Deputy Pearse Doherty has said about cosy arrangements and sweetheart or secret deals. It is fair to say there is, not only in this jurisdiction but also right across the world, a general move towards the co-location of intangible assets. There has been substantial activity in response to international tax initiatives, particularly with reference to the OECD, an issue that has been discussed both at committee level and across the House in the context of base erosion and profit sharing. The capital allowance regime in this jurisdiction is very important in attracting substantial economic activity. I do not need to remind the House of the importance of foreign direct investment in job creation in the economy and of the contribution it has made for many years but, in particular, in recent times as we have moved towards recovery. In that regard, intangible assets are becoming increasingly important in global business. They are the key to innovation and the exploitation of new products and markets and an important source of a competitive advantage for businesses in Ireland. There is a growing trend towards centralising the management and exploitation of these assets in global or regional hubs. It is important, therefore, that we continue to ensure Ireland is well positioned as an attractive location for global businesses seeking to develop and commercialise on the international stage.

It is important that we proceed with this resolution. It is also important to reflect on the fact that, prior to the introduction of the scheme, the tax system provided for an allowance of a limited nature, for example, for patent rights, computer software and know-how, but in recent times we have moved towards a more broadly based scheme for assets under section 291A. That is why it was important that it be used to address the needs of the tax system. I do not believe we are dealing with any secret or sweetheart deal. In fact, the evidence clearly shows that Ireland has followed the international norm in this regard and taken a similar approach to that taken in countries such as the United Kingdom, our nearest neighbour, and the USA. This is important in the context of the current regime in the United States and the manner in which it is dealing with revenue and tax issues. It is also important in the context of the impending withdrawal of the United Kingdom from the European Union.


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